Some software (e.g., GNOME) expects the system hostname to be resolvable to an IP address with a canonical fully qualified domain name. This is really improper because system hostnames and domain names are two very different things; but there you have it. In order to support that software, it is necessary to ensure that the system hostname can be resolved. Most often this is done by putting a line in /etc/hosts containing some IP address and the system hostname. If your system has a permanent IP address then use that; otherwise use the address 127.0.1.1.
/etc/hosts
/etc/hostname
The system hostname should always be resolvable even when the network is down. Basically, some applications still try to resolve a host via 127.0.1.1 so in order to accommodate, it is kept by default on current debian-type distributions.
The general rule of thumb is: If you don’t have a permanent IP address for your host, use 127.0.1.1.